Encyclopedia of Chart Patterns. Thomas N. Bulkowski
Читать онлайн книгу.
What does this mean? Trading chart patterns and expecting a huge gain is unrealistic. Large gains happen, sure, but you might want to invest for the long term (buy and hold) or stick to swing trading and nibble off what you can. Keep your expectations realistic.
Table 8.4 shows breakout‐related statistics.
Breakout direction. This just in: Broadening bottoms break out upward more often than downward!
Yearly position, performance. I sorted the breakout price into one of three bins, depending on where it was in the yearly high–low price range. The best performance came when the breakout price was near the yearly low. The worst was when it was near the yearly high. That suggests bottom fishing (buy low, sell high) works better for the broadening bottoms than momentum trading (buy high, sell higher).
Throwbacks and pullbacks. The next several rows in the table dissect throwbacks and pullbacks. If you don't know what a throwback or pullback is, ask your mom (or check the Glossary).
Throwbacks happen 69% of the time. Price breaks out upward from a broadening bottom, rises for a week by an average of 6%, and then returns to (or comes close to) the breakout price by day 12.
If you're an experienced swing trader, you might want to short a downward breakout and close the position in a week or when price drops 7%. However, the median decline is just 5%, so it might not be worth it.
Table 8.4 Breakout and Post‐Breakout Statistics
| Description | Up Breakout | Down Breakout |
|---|---|---|
| Breakout direction | 60% up | 40% down |
| Performance of breakouts occurring near the 12‐month low (L), middle (M), or high (H) | L 48%, M 45%, H 43% | L –16%, M –13%, H –11% |
| Throwbacks/pullbacks occurrence | 69% | 62% |
| Average time to throwback/pullback peaks | 6% in 7 days | –7% in 7 days |
| Average time to throwback/pullback ends | 12 days | 12 days |
| Average rise/decline for patterns with throwbacks/pullbacks | 43% | –14% |
| Average rise/decline for patterns without throwbacks/pullbacks | 48% | –16% |
| Percentage price resumes trend | 75% | 49% |
| Performance with breakout day gap | 48% | –14% |
| Performance without breakout day gap | 44% | –15% |
| Average gap size | $0.63 | $0.74 |
Anyway, I compared the performance of broadening bottoms with and without throwbacks or pullbacks and found that the pattern performs better without a throwback or pullback happening. That's not a surprise because I've seen that behavior in other chart patterns, too.
After a throwback or pullback ends, the stock resumes moving upward 75% of the time after an upward breakout and drops 49% of the time after a downward breakout. Be careful when thinking you can short after a pullback completes. Price might continue rising instead (51% do).
Gaps. Do breakout day gaps help performance? Sometimes. Gaps are not a big indicator of future performance. I checked the statistics for various types of chart patterns (double bottoms, head‐and‐shoulders, and so on), and the average performance improvement is one percentage point. Upward breakouts in bull markets saw price climb by two percentage points if they had a gap. That's for all non‐Fibonacci chart patterns. In other words, there's not a big performance difference when you average all the numbers together.
For broadening bottoms, gaps help performance by an average of one to four percentage points, depending on the breakout direction. The gap size is slightly larger after a downward breakout, and that might have something to do with how price drops faster than it rises.
Table 8.5 shows pattern size statistics. This is one of my favorite tables because height is usually the best indicator of future performance.
Height. Tall patterns outperform. What is meant by tall? Compute the height of the pattern from the top of the broadening pattern to the bottom and divide the result by the breakout price. A tall pattern will have a ratio larger than that shown in the table for the associated breakout direction.
Table 8.5 Size Statistics
| Description | Up Breakout | Down Breakout |
|---|---|---|
| Tall pattern performance | 48% | –17% |
| Short pattern performance | 42% | –12% |
| Median height as a percentage of breakout price | 12.0% | 13.2% |
| Narrow pattern performance | 46% | –14% |
| Wide pattern performance | 44% | –16% |
| Median width | 41 days | 39 days |
|
| ||